ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, February 12, 1996 TAG: 9602130061
SECTION: THE MONEY PAGE PAGE: 6 EDITION: METRO
COLUMN: Tax Questions
Q: Can I write off a monthly car-lease payment on my taxes? I use my car for business, but I get a car allowance from my company plus mileage. The car allowance is defined as "business expense" on my pay stub. It is added into my biweekly pay.
A: Individuals claim unreimbursed employee business expenses as a miscellaneous itemized deduction on Schedule A of their individual tax return to the extent that these expenses, along with the taxpayer's other miscellaneous itemized deductions, exceed 2 percent of their adjusted gross income.
Your lease payments are considered unreimbursed because the amounts you receive from your employer are added to your regular earnings as taxable income.
The lease payments, along with the actual expenses of operating the car such as gasoline, oil, repairs, insurance and other similar items, are first summarized on Form 2106, with the total deduction carried to Schedule A.
These expenses are reduced by the percentage that the vehicle is driven for personal use. This percentage is based on mileage and is computed on Form 2106.
You should be aware that the lease payments may be further reduced by an income inclusion amount, based on the fair market value of your car when it was first leased. This inclusion amount also is computed on Form 2106.
-Answered by Reid W. Ammen of Budd, Ammen & Co.
Tax-related questions from our readers are answered by members of the Roanoke chapter of the Virginia Society of Certified Public Accountants. This feature runs every Monday on the Money Page through April 8. Please send your questions to Tax Questions, The Roanoke Times, P.O. Box 2491, Roanoke 24010.
LENGTH: Short : 40 linesby CNB